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Standard requirement on construction contracts

Contractor’s All Risk

Also known as: Contractor’s All Risk Policy

Comprehensive cover for civil construction projects, from site preparation through to handover.

Overview

What is Contractor’s All Risk?

Contractor’s All Risk covers physical loss or damage to civil engineering and construction works during the project period, together with third-party liability arising from construction activity. It is an all-risk policy, meaning it covers all causes of loss except those specifically excluded. Most construction contracts in India require it as a condition of commencement, and project owners frequently specify minimum limits.

What it covers

Physical damage to permanent and temporary works

Fire, flood, storm and natural catastrophe during construction

Theft of materials from site

Third-party bodily injury and property damage

Debris removal following an insured event

Surrounding property owned by the principal, where extended

Maintenance and defects liability period, where extended

What it excludes

Defective design, workmanship or materials — though resulting damage may be covered

Wear and tear and gradual deterioration

Consequential loss and liquidated damages for delay

Loss discovered only at inventory

Damage to plant and machinery — that requires CPM cover

War, nuclear and willful acts

Who Needs It

Is this cover relevant to your business?

Civil contractors, infrastructure developers, real estate developers and project owners. Typically arranged by the principal contractor but frequently specified and sometimes placed by the project owner. Sub-contractors are usually covered as additional insureds under the main policy, though this should be confirmed rather than assumed.

How the sum insured is set

Sum insured is the full contract value including materials, labour and any free-issue materials supplied by the principal. Third-party limits are set separately and commonly specified in the contract. Under-declaring contract value triggers the average clause and reduces every claim proportionally.

Before You Buy

What we check on every placement.

The difference between a policy that responds and one that disappoints usually sits in details that are easy to overlook at purchase.

Whether the policy period covers realistic completion, not the optimistic schedule

Whether a maintenance and defects liability extension is required by the contract

Whether third-party limits meet contractual minimums

Whether surrounding property owned by the principal is covered

Whether plant and machinery needs separate CPM cover

Whether sub-contractors are named as additional insureds

Related Cover

Often placed alongside

Erection All Risk Contractor’s Plant & Machinery Workmen’s Compensation

Not sure which combination fits your business?

Speak to an Adviser

Common Questions

Contractor’s All Risk — common questions

Who arranges CAR insurance — contractor or owner?

Either. The contract determines it. Owner-arranged policies covering all contractors are common on larger projects and avoid coverage gaps between parties.

What happens if the project overruns?

Cover must be extended. Damage during an unextended overrun period falls entirely outside the policy. This is one of the most common gaps in construction insurance.

Is defective workmanship covered?

The defective work itself is excluded. Damage caused to other parts of the works by that defect is generally covered, depending on the wording and which exclusion clause applies.

What is the maintenance period extension?

Cover during the defects liability period after handover, when the contractor remains contractually responsible for rectifying defects. Without it, that period is uninsured.

Does it cover the contractor’s plant and equipment?

No. Cranes, excavators and site plant require a separate Contractor’s Plant and Machinery policy.

Is it required for government projects?

Almost invariably. Public infrastructure tenders specify CAR cover with defined minimum limits as a qualification condition.